UK power back-up scheme approved by EU regulator

Earlier this week, a scheme allowing British power companies to receive payouts to maintain extra energy generation has been improved. The scheme was designed to safeguard the security of electrical supply so power would be available at short notice if there were supply disruptions.

The European Commission has approved the scheme after payments were delayed by the European court. The court ordered for more information to be provided, including information about whether consumers were able to decrease consumption in cases of shortages.

However, the Commission said it hasn’t found evidence of this, and that the scheme was in line with EU rules. In a statement, it noted:  “The Commission did not find any evidence that the scheme would put demand response operators or any other capacity providers at a disadvantage with respect to their participation in the scheme.”

The British government said it will now be reinstating the scheme, and that “the vast majority of the back-payments will reach capacity providers in January 2020”. It added that almost £1 billion of payments were blocked during the suspension.

Following the news, shares in British power company Drax went up. The firm was owed £75 million in payments. The chief executive said: “We will be prequalifying a number of Drax’s flexible and reliable power stations, as well as some of our development projects, later this year with a view to participating in the capacity markets auctions in 2020.”

However, the news had received some criticism. For example, several non-government groups in the industry have tried to block the scheme. They say it has been illegally subsidising fossil fuels and this stopped new, more innovative ways of supplying power from being introduced.

Jonathan Marshall, from the Energy and Climate Intelligence Unit (ECIU), a non-profit group commented: “Serious questions persist on the necessity of a capacity market. There remains little evidence that it is needed to keep British lights on.“ He added that the scheme would “continue to shut out innovative and disruptive technologies that are vital in the transition to a smarter, cleaner and cheaper electricity system”.